House of Commons · Westminster Hall
01 December 2021 · 12 other contributors · 13,609 words
Opened by Emma Hardy Lab Kingston upon Hull West and Haltemprice
Responding minister: John Glen
Summarised by AI from the official record, so it can contain mistakes.
Emma Hardy raised concerns about community debt advice services in Westminster Hall. A government minister responded.
Key points
Key requests to Government
I ask MaPS to place an immediate hold on procurement of new debt advice contracts until a thorough consultation is completed into future demand for face-to-face services. I also request that no loss of jobs in community-based debt advice occurs and that funding for these essential face-to-face services increases.
MPs spoke in turn to share their views and ask questions. Here's what each person said.
Opened the debate
I am concerned about the trebling of UK households behind on rent, bills or debt repayments to nearly 4 million since the pandemic. Families are being dragged into arrears by economic pressures, including a £20-a-week cut to universal credit and rising domestic fuel prices. Over 100,000 people attempt suicide each year because of debt, highlighting the life-saving importance of face-to-face debt advice for vulnerable individuals dealing with complex cases.
Sobel highlighted the financial challenges faced by individuals due to increasing taxes, inflation, gas price crisis, end of furlough and removal of universal credit uplift. He mentioned that at least 7 million adults are behind on household bills and cited a sharp rise in defaults and energy costs as predicted by the Bank of England. Sobel stressed the severe impact of debt on mental health, citing an example of Jerome Rogers who died due to accumulated debts. He discussed the importance of face-to-face debt advice services provided by community centres, which offer additional support such as food parcels and counselling. Sobel was concerned about a 50% to 60% cut in face-to-face debt advice services in Leeds following MaPS funding changes.
Acknowledges high levels of indebtedness in Hull and suggests a hybrid system combining face-to-face appointments with telephone advice as a potential solution.
Mr. Campbell paid tribute to organisations like Citizens Advice and Christians Against Poverty for offering empathy and counselling roles, particularly for vulnerable families in need of assistance through their problems.
Congratulates Yvonne Fovargue on securing the debate and supports the concern that the renegotiation of the MaPS contract will lead to a reduction in face-to-face advice, emphasizing its necessity for complex cases.
Shannon highlighted the significant financial difficulties faced by constituents in Strangford, noting a 30% increase in energy costs and up to 20% rise in food prices. He cited examples of individuals turning to payday loans due to extreme debt and emphasised the importance of community organisations like Christians Against Poverty (CAP) and Citizens Advice Bureau for financial advice and support.
Raises concern over the shift from face-to-face to online/telephone debt advice, citing a significant decrease in funded advisers and an increase in demand due to rising costs, questioning the justification for these cuts.
Mr. Turner highlighted the importance of a holistic approach to advice, noting that it is often not just about debt but also encompasses issues such as domestic violence and other factors leading to difficulties. Paying tribute to Unite the union for its constructive campaign on this issue and acknowledging the crucial role of Citizens Advice, Karl Turner highlighted the need to pause proposed changes to debt advice services due to uncertainties arising from the pandemic. He noted that insolvency in his constituency is double the national average, emphasizing the importance of proper consultation before proceeding. The MP thanked the Minister for his constructive approach and suggested that MaPS consider pausing the process due to uncertainty caused by the pandemic.
Charities in her constituency are reporting an increase in people seeking debt advice, and she questions the fairness of expecting charities to bear most of the burden. Ms. Ferrier asked whether real-life money management education should be provided earlier in life given the difficulty many people face in managing their finances effectively and seeking support after debt has been accrued. A lot of people are not aware that Christmas spending can be accounted for in income and expenditure forms when dealing with debt, suggesting the need for better awareness without losing quality of life.
Families in Nottingham East have faced financial difficulties due to the financial crash, austerity measures and the pandemic. St Ann's Advice Centre has been a crucial support with debt advice and other services. The centre will lose its MaPS-funded debt advisers under new proposals, which could negatively affect vulnerable individuals who rely on face-to-face support.
Debt has profound impacts on those with lower incomes, who may face challenges such as payday loans and depleted savings during the pandemic. Since 2012, household debt has risen annually; under lockdown, unsecured debt declined but inequalities persisted. Low-income families saw their savings almost vanish while higher-income households' savings quadrupled. The Government's proposed reduction in face-to-face debt advice is concerning, as it fails to consider local variations and the importance of tailored support.
Pat McFadden highlighted the stress and financial strain caused by debt, especially for families on low incomes during the pandemic. He cited statistics from StepChange indicating that 14 million people faced income falls at the start of the pandemic and 4.3 million are behind on bills. McFadden expressed concerns over the shift towards online and telephone advice, fearing a reduction in face-to-face advisers by two-thirds under current plans. He emphasized the importance of privacy, local knowledge, representation to courts, and urgent interventions for those with complex debt needs.
Yvonne Fovargue highlighted the high demand for debt advice services, noting that personal debt is soaring due to rising energy and food bills. She expressed concern over the end of furlough and debt payment holidays, which have exacerbated the issue. With about 4 million low-income households behind on payments, she questioned whether it was appropriate to introduce a new commissioning model at this time. Fovargue also criticised the proposed contract for face-to-face services, pointing out that some small agencies are being put off from bidding due to risks and payment terms. She raised concerns about the shift towards digital and phone-based services, especially in areas with low internet usage, and stressed the importance of personal contact for vulnerable clients. Concerned about the rise in buy now, pay later debts, which are increasing exponentially; one advice agency reported that 34% of people are coming to them with such debts. The MP asked whether the Minister had discussed with clinical commissioning groups about commissioning services like Financial Shield to help individuals dealing with debt and mental health issues, which could save money for the NHS.
Government Response
John GlenThank you for the opportunity to respond, Ms Bardell. It is a pleasure to serve under your chairmanship and to speak in the debate on behalf of the Government. I have listened intently and carefully to all seven Back-Bench speeches, which have revealed considerable understanding of the complexity of the service delivery in constituencies across this country. There has also been significant commentary around the context in which our constituents find themselves at this incredibly difficult time. The Government are committed to supporting the financial wellbeing of the most vulnerable in society and tackling problem debt. We recognise that individuals in problem debt require extra support, especially during this challenging time, leading us to provide additional funding to the Money and Pensions Service for debt advice provision in England in 2020-21 and this financial year. The Government have also launched initiatives such as the breathing space scheme and are developing a statutory debt repayment plan to help individuals manage their debts more effectively. We introduced plans to provide £3.8 million for a pilot no-interest loans scheme, which aims to support people who cannot access or afford existing forms of credit. Additionally, we are working closely with regulators to ensure fair practices in the sector and prevent consumer harm. Regarding MaPS' debt advice commissioning exercise, I commit to ensuring that concerns raised by MPs will be represented fully to MaPS as it undertakes its evaluation and moderation of bids received. Once this is completed, MaPS will have a greater understanding of what changes the commissioning process will mean for debt advice provision in England. The Government acknowledge that wherever services are subject to commissioning, there may be elements of uncertainty and change for the sector, but they will ensure that the outcome achieves value for money and meets the needs of vulnerable customers.